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What is OPEC and how does it shape global oil markets?

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Oil is once again making headlines.

This week, the United Arab Emirates (UAE) made the shock decision to leave the Organisation of the Petroleum Exporting Countries (OPEC).

OPEC is network of oil-producing nations formed in 1960 with the aim of stabilising oil prices in ways that reduce competition and increase profits for member states.

In the decades since, OPEC has become one of the dominant players in the global oil market. This was evident during the 1970s oil shock, where global oil prices quadrupled largely due to OPEC-led cuts to production and sales.

But OPEC has just lost one of its largest producers in the UAE.

So will this dampen OPEC’s influence? And what does this mean for global oil prices?

The origins of OPEC

Before OPEC, there were the “Seven Sisters”. This refers to the seven Western international oil companies – Texaco, Exxon, Mobil, Chevron, Gulf Oil, British Petroleum and Royal Dutch Shell – that dominated the petroleum industry in the 19th century. They did this by controlling virtually every step of the oil supply chain, from extraction to refining to transport.

By the end of the Second World War, the Seven Sisters had gained control of Middle East oil production. They did this by forming contracts with Middle Eastern rulers that effectively gave the companies total control of their oil reserves.

Eventually, these governments got tired of being dominated by the Seven Sisters. For them, the final straw came in 1960, when the oil companies made cuts to the posted price – the price a company publicly agrees to pay for oil. In protest, four Middle Eastern oil-producing states – Iran, Iraq, Kuwait and Saudi Arabia – along with disgruntled Venezuela formed their own cartel in September 1960. And OPEC was born.

Since then, OPEC has expanded to officially include Algeria, the Republic of the Congo, Equatorial Guinea, Gabon, Libya and Nigeria.


Read more: Will oil prices ever truly go back to ‘normal’?


How does OPEC influence oil prices?

OPEC was formed with the explicit aim of setting the global oil price by regulating the supply of oil. Its goal remains the same today.

To achieve this, OPEC sets production quotas for member countries. This creates either a scarcity or glut of oil. Creating a scarcity increases profits for OPEC members while creating a glut prevents other producers – such as the US – from challenging their dominance.

In 1973, OPEC showed its power for the first time by embargoing oil exports to the US. Within months, OPEC members were able to nearly quadruple global oil prices.

The embargo drove the world into recession, leading the US Federal Reserve to repeatedly cut interest rates. And the economy of import-reliant Japan shrank for the first time since the Second World War.

However, OPEC has only ever controlled part of total global oil production. Between 1992 and 2022, OPEC production on average accounted for 40% of the global crude oil supply.

In 2016, OPEC expanded its influence by forming an alliance with Russia and nine other non-member nations. This alliance is known as OPEC+, and today controls about 44% of global oil production.


Read more: The UAE is leaving the OPEC oil cartel. What could that mean for oil prices?


Are OPEC’s actions legal?

The short answer is, it’s complex.

OPEC is often described as a cartel – a group of exporters working together to improve profits and reduce competition.

If OPEC operated in the private sector, its control of production quotas and pricing would be considered illegal. Cartels are banned because they are anti-competitive, in that they artificially control prices, stifle innovation and restrict production. They do this all while maintaining the illusion of competition.

But OPEC’s members are not businesses. They’re nations. Several American legal rulings maintain OPEC’s actions are not cartel activities and, as a result, cannot be brought to court.


Read more: When oil prices spike, where does the money go?


Is OPEC getting weaker?

Since 2000, OPEC’s strength has waned due to two key factors.

One is the resurgence of the US as a global oil power. In the 20th century, US oil production peaked in 1975 before falling sharply as the country’s oilfields ran dry.

But in the 2000s, US oil companies found a way to combine two oil extraction techniques – fracking and horizontal drilling – to great effect. This allowed the US to double its oil production between 2010 and 2020. The US is now the world’s top oil and gas producer, churning out roughly 16.5 million barrels each day. Most of this goes towards domestic consumption.

The second factor is the unpredictability of OPEC’s members. OPEC is an international organisation, but nations can and do leave to pursue their own interests.

Over almost 30 years, Ecuador variously suspended, renewed and withdrew its membership before ultimately leaving OPEC in 2020. This allowed it to increase domestic oil production, free of OPEC’s production quotas.


Read more: The end of oil? As fuel shocks cascade, 53 nations gather to plan a fossil fuel phaseout


Qatar quit in 2019 to concentrate on gas exports, but Qatar’s exit may be construed as a response to OPEC’s waning influence. Its dominance in gas rather than oil may also be a factor.

The UAE has become the latest deserter. Its government now intends to increase oil production, free of its OPEC obligations. However, analysts view the UAE’s decision as a sign of growing rifts between Gulf nations. And the ongoing US-Iran war has only heightened tensions.

The UAE’s exit is a major blow to OPEC’s influence. In today’s volatile world, other OPEC members may also consider quitting the organisation. But only time will tell if that decision is a brave or foolhardy one.

The Conversation

Tina Soliman-Hunter does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

‘1930s policing’: the tactics police used in the hunt for Alice Springs girl Kumanjayi Little Baby

In the hours since the story was first published, a body believed to be that of the missing girl has been found. Aboriginal and Torres Strait Islander readers are advised this article contains the name of a person who has died. The family has asked for her to be referred to as Kumanjayi Little Baby.

On Saturday night, a five-year-old girl – whose family has asked be referred to as Kumanjayi Little Baby – was allegedly abducted from a home in a town camp and is still missing.

Northern Territory Police allege she was abducted by Jefferson Lewis. The 47-year-old had only been released from prison several days earlier and was staying at the same address as Kumanjayi Little Baby.

It is already “one of the biggest” manhunts in recent NT history and made even more difficult by the fact Lewis doesn’t have much of a digital footprint.

So, what police tactics are available in these situations?

‘Going back to 1930s policing’

Northern Territory Police Commissioner Martin Dole said police believed there are people in the local community who may know of Lewis’ whereabouts. Police said Lewis was not on bail or subject to any conditions when the alleged abduction took place.

Police found several personal items at a crime scene at the town camp, which were sent for forensic testing.

Dole said the hunt was “the biggest one I can recall in a very long time”. He added:

We’ve got specialist sections here, we’ve got assistance from interstate, we’ve had offers from interstate all over the other jurisdictions, we’ve got inquiries happening in other jurisdictions, and we’re pouring every available resources down here to assist. And overwhelming support from the community as well.

Making the hunt for Lewis significantly more difficult is the fact he doesn’t use much modern technology.

NT Police Assistant Commissioner Peter Malley said:

It’s like we’re going back to 1930s policing without a digital footprint – this man doesn’t have a telephone, he doesn’t have a bank account, he doesn’t have a car, so some of the usual practices that we do in 2026 aren’t applicable, hence the amount of resources we have on the ground.

Searchers are enduring tough conditions, Malley said:

(The search conditions are) pretty difficult – long grass, soft sand, rocks, large trees, it’s really overgrown, so it’s a tough slog out there for the people searching.

A trickier search than normal

Technology ties a person to a time and place. For example, When someone uses a phone, it logs their location. If they use an ATM, there may be facial recognition that captures their image.

Not using technology blinds police.

Despite there being little-to-no electronic footprint of Lewis, police still have tactics to locate people who exist off the grid. While a person’s use of technology does aid police, this does not mean they are untraceable if they don’t.

Police will be relying heavily on the local community, given the remoteness of the search.

They will also be calling on the expert knowledge of Indigenous Elders whose local experience in the reading of Country will be crucial – their skills represent knowledge that technology can’t replicate.

Searchers will be looking for:

  • footprints that might note stride length and depth (indicating pace and load)

  • crushed or bent vegetation, broken branches at body height and disturbed bark on trees

  • compression signs where someone sat, rested, or lay down

  • drag marks, blood trails, or disturbed leaf litter

  • clothing fibres snagged on thorns, hair, or fingernail marks on rocks.

Searchers will also be looking for sheltered areas: rock overhangs, dense scrub, or behind fallen logs.

They will also look out for disturbed animal behaviour such as flushed birds (birds that take flight when scared) or silent zones (an area where normal background sounds of nature are absent or noticeably reduced) which can indicate human presence.

Then there is technology.

The power of police technology

A distinctive element of a police search is AI imagery analysis.

All aerial footage from drones and helicopters gets compiled and analysed. The high-definition, digitally enhanced images are catalogued, including every heat signature of a “grid” of terrain.

This can identify livestock, wildlife, carcasses or a human figure.

This AI analysis can also identify every human and non-human item that may or may not have a heat signature across a geographic area.

But underlying all these different strategies is the age-old practice of map reading.

Map reading can include:

  • sweep/line searching – people spread out at intervals and advance in a line

  • grid searching – the area is divided into sectors, with each systematically cleared

  • spiral searching – teams move outward from a last known point in an expanding spiral

  • contour searching – following natural terrain features like ridge lines and creek beds.

These centuries-old practices are still relevant today in trying to find someone.

Bushcraft and persistence

Dole said on Thursday he feared the “timeframe of survivability” was coming to an end for Kumanjayi Little Baby, after consulting with survival experts.

Police will continue to explore all avenues in the hope of finding her safely.

While some technology will be used by searchers, the hunt will likely rely on old-fashioned bushcraft skill and human persistence.

The Conversation

Vincent Hurley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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